TY - JOUR
T1 - Lending booms, reserves and the sustainability of short-term debt
T2 - Inferences from the pricing of syndicated bank loans
AU - Eichengreen, Barry
AU - Mody, Ashoka
N1 - Funding Information:
This paper was prepared for the Interamerican Seminar on Macroeconomics, Rio de Janeiro, 3–5 December 1998. We thank the participants and especially our discussants, Sebastian Edwards and Aaron Tornell. For research assistance above and beyond the call of duty, we are indebted to Qiming Chen. Ken Wood, Freyan Panthaki, and other members of the Emerging Markets Division of the Research Department of the International Monetary Fund were instrumental in helping to construct the data set. Finally, we thank the World Bank's Research Committee and the Ford Foundation (through the UC Berkeley Project on International Financial Architecture) for partially financing the research for this paper.
PY - 2000
Y1 - 2000
N2 - This paper analyzes the determinants of spreads on syndicated bank lending to emerging markets, treating the loan-extension and pricing decisions as jointly determined. Compared to the bond market, our findings highlight the role of international banks in providing credit to smaller borrowers about whom information is least complete and, more generally, support the interpretation of bank finance as dominating that segment of international financial markets characterized by the most pronounced information asymmetries. Domestic lending booms and low reserves in relation to short-term debt have been priced in the expected manner by international banks. The high level of short-term debt in East Asia was supported by high growth rates but was characterized by a knife-edge quality. (C) 2000 Elsevier Science B.V. All rights reserved.
AB - This paper analyzes the determinants of spreads on syndicated bank lending to emerging markets, treating the loan-extension and pricing decisions as jointly determined. Compared to the bond market, our findings highlight the role of international banks in providing credit to smaller borrowers about whom information is least complete and, more generally, support the interpretation of bank finance as dominating that segment of international financial markets characterized by the most pronounced information asymmetries. Domestic lending booms and low reserves in relation to short-term debt have been priced in the expected manner by international banks. The high level of short-term debt in East Asia was supported by high growth rates but was characterized by a knife-edge quality. (C) 2000 Elsevier Science B.V. All rights reserved.
KW - Banks
KW - Debt
KW - International reserves
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U2 - 10.1016/S0304-3878(00)00098-5
DO - 10.1016/S0304-3878(00)00098-5
M3 - Article
AN - SCOPUS:0033826094
SN - 0304-3878
VL - 63
SP - 5
EP - 44
JO - Journal of Development Economics
JF - Journal of Development Economics
IS - 1
ER -